General Motors CEO Fritz Henderson has previously stated that a new buyer for Opel would be picked this year and that at least three different companies were still in the bidding. Those three companies included auto parts supplier Magna International, private equity group Ripplewood Holdings and Chinese automaker Beijing Automobile Co. (BAIC), however, late last month reports emerged claiming the German government and GM had failed to agree on a buyer though Magna is said to be the leading contender.
Now it appears that GM has a backup plan to keep Opel all for itself. Latest reports indicate that GM is considering a plan to raise funding to keep Opel as an alternative to selling the unit. At a board meeting last Friday, GM directors declined to endorse a sale of Opel to Magna, sending the automaker back into negotiations this week with the German government.
A person familiar with Magna’s plans previously revealed that the parts supplier had increased its bid for Opel, from the original 20% stake it envisioned, to 27.5%. Under the new plan, Magna and Sberbank, Magna's Russian partner, would own 55% of Opel--27.5% each--while the remaining 35% would go to GM and 10% would go to Opel employees.
However, while GM remains focused now on trying to clear remaining issues with the Magna deal, executives also are considering other options, including raising more than $4 billion in a bid to keep Opel, sources said. To raise the necessary funds, GM could potentially sell or mortgage its assets in China.
In the meantime, the German government is providing Opel with bridge loans to stay afloat while the bids continue to be studied. GM has also asked Germany for financial assistance for the brand.
[Reuters]